The stock has enjoyed strong buying momentum supported by a series of bullish breakout on the back of the higher trading volume
by PRIYA VASU / pic by MUHD AMIN NAHARUL
VIVOCOM International Holdings Bhd’s move to become a full-fledged property developer player has fuelled a price rally in the stock which hit a high of RM1.95 on Monday.
Rakuten Trade Sdn Bhd, in a technical view on the stock on Tuesday, stated chart-wise, the stock has enjoyed strong buying momentum supported by a series of bullish breakout on the back of the higher trading volume.
Investors flocked to Vivocom after it proposed to buy V Development Sdn Bhd, a deal that would ensure earnings for Vivocom beyond 2023.
Profit-taking on the past two trading days has seen a pullback with the stock closing at RM1.86 yesterday after hitting a low of RM1.73 in intraday trade.
The online broker noted based on the price action, Vivocom’s share price could cross the RM2 level and continue its bullish run possibly charting new highs.
A further share price rally would encounter major resistance at RM2.18 and RM2.37 levels with downside support seen at RM1.75 and RM1.50 levels, the broker noted.
Vivocom’s aggressive business acquisition in the property sector during the Covid-19 pandemic raises questions as major property developers are finding it difficult to sell their commercial and residential properties.
Based on the latest data released by the National Property Information Centre (Napic), the property market suffered year-on-year (YoY) fall in the first half of 2020 (1H20).
Property transaction volume for the period fell by 27.9% YoY to 115,476, while transaction value declined 31.5% to RM46.94 billion.
Vivocom embarked on property diversification prior to the end of 2019, as part of its vertical integration strategy for organic and inorganic growth.
Earlier this month, Vivacom proposed the acquisition of a 45% stake in V Development for RM170 million which will be satisfied via a combination of cash and issue of
shares and/or issuance of irredeemable convertible preference shares.
While the general rule of thumb is to reserve major investment decisions during economic uncertainties, Vivocom’s proposed enlargement of its asset is likely to hinge on several factors.
V Development Group already has a total of seven active development projects with an aggregate gross development value (GDV) of RM2.56 billion focusing on the development of residential and mixed (commercial and residential) projects, with GDV ranging from RM38.4 million to RM1.5 billion.
V Development’s projects are predominantly located within Peninsular Malaysia, specifically on landbanks in Kuala Lumpur, Selangor and Perak.
The news of Vivocom’s acquisition of V Development also reflects positively in its equity performance.
In 2018, Vivocom’s stock surged to RM2.30 on the announcement for securing a RM12.6 million contract from CRCC Malaysia Bhd to supply labour, tools and equipment for the construction of reinforced concrete structure and structural steelworks for an office tower.
The group’s officials reportedly said it is eyeing a RM3 billion construction revenue by 2018. However, no development has been reported on the project since.
V Development is now involved in the construction of Residensi Inspirasi Setapak in Kuala Lumpur, which consists of one block of a 45-storey apartment with 900 units and carpark bays which is expected to be completed by February 2023.
It’s also involved in a residential development eLVi Kemensah, Taman Melawati, with a GDV value of RM248.33 million with completion scheduled for April 2024.
Outside the Klang Valley, the group is actively involved in residential development in Seri Manjung, Perak, with a GDV value of RM304.81 million with completion in June 2024.
It’s also engaged in a RM1.54 billion mixed development in Kuching, Sarawak, to build 3,864 units of industrial, commercial and residential units. Based on the preliminary plan, the development will have 1,792 units of apartments and townhouses, 1,422 landed houses, 158 shophouses, 487 industrial buildings, transport hub, vegetation distribution centre, shopping mall, exhibition centre and research centre.
The proposed acquisition is deemed as a related party transaction by the group CEO Datuk Seri Chia Kok Teong and major shareholder, as well as the vendor of the proposed acquisition. He currently holds some 23% shares in the company.
In another proposal, Vivocom has a subscription agreement with Golden Key Portfolio Sdn Bhd for a private placement of 169.94 ordinary shares in Vivocom, representing 30% of the total issued shares at a subscription price of 35 sen per share.
Vivocom was established on Oct 8, 2012, when Instacom Engineering Sdn Bhd completed the restructuring and reverse take-over of I-Power Bhd, and subsequently changed its name to Instacom Group Bhd.
In 2015, the group diversified into the construction industry and aluminium design and fabrication businesses when it acquired Neata Aluminium (M) Sdn Bhd and Vivocom Enterprise Sdn Bhd.
The listed holding company then changed to its present name, Vivocom International Holdings Bhd, to strengthen the group’s brand image and to better reflect the group’s new focus and aspiration to be a regional construction group.
At present, the group’s core activities are construction, aluminium design and fabrication, and telecommunication engineering services.